HSBC to sell its $9.3b stake in Ping An Insurance

Ping An to be divested despite its profitability.

HSBC intends to sell its $9.3 billion stake in Ping An Insurance (Group) Company, China's second-largest insurer, and is currently in talks with several interested investors.

The bank plans to sell all of its 1.23 billion Hong Kong-traded shares in Ping An, or 40% of the insurance company's Hong Kong-traded shares and 15.6% of all Ping An stock.

The move is part of HSNC’s overarching strategy of peeling away non-core businesses to raise cash to meet stricter regulatory requirements and boost profitability.

HSBC it is in discussions which may or may not lead to the sale of the shares. Among those reportedly interested in the HSBC stake is Thailand’s Charoen Pokphand Group.

Analysts are split on the wisdom of divesting Ping An, with some saying the move will actually generate more benefits than the existing investment in Ping An. HSBC will record a pre-tax profit of up to US$6.5 billion if it sells the Ping An stake.

Others, however, noted Ping An’s role as an important profit generator for HSBC. Ping An’s third-quarter profit rose 21% to 2.13 billion yuan as its banking unit contributed more revenue and premium income expanded.